Regional Capitals Australia (RCA), representing 21 major hubs across the country, has thrown its weight behind a new Productivity Commission inquiry into National Water Reform. The group hopes the inquiry will finally address why regional communities are being “locked out” of the financial support needed to maintain and expand their water infrastructure.

The scale of the crisis is highlighted in RCA’s latest Pre-Budget Submission, which reveals that 44% of regional capital cities are already battling significant water shortages every year. Despite being tasked with spearheading national priorities—including renewable energy zones, defense projects, and housing—nearly 80% of regional councils say they cannot access the funding pathways necessary to upgrade the ageing systems that underpin these goals.

RCA Chair, Cr Josh Black, says there is a dangerous disconnect between national expectations and local reality.

“We don’t have a shortage of water projects in regional Australia,” Cr Black said. “We have a system that locks out regional leaders’ ability to put their projects forward for funding.”

He warned that without reform, water scarcity will become a “binding constraint” that delays housing developments and halts industrial expansion.

The pressure on these systems is coming from all sides. Rapid population growth in regional hubs is stretching existing supplies, while emerging threats like PFAS contamination and climate volatility require urgent research and investment. Furthermore, over half of Australia’s water demand is driven by the primary industries that regional cities support, meaning any failure in supply has a direct and immediate impact on national food security.

To bridge the gap, the RCA is calling on the Federal Government to allow local governments direct access to the National Water Grid Investment Framework. They are also pushing for a more transparent process to prioritise regional projects, arguing that water must be recognised as “critical enabling infrastructure” for the nation’s transition to renewable energy and the delivery of new housing.